INITIATE-DJI-DOW JONES-DOW DOW DOWN-STRONG SELL for AMEX:DIA by FibMarketWatch

Initiating DJI (Dow Jones Industrial Average) with a STRONG SELL.

Analysis Method: Wave Theory + Fibonacci

The Chart of the Dow shows a completed Cycle Wave Sequence that lasted approx. 9 years/3,259 days from 2009 to 2018. Cycle Wave 1 extended and provided a gain of 73% +/- that lasted 420 days. Next, Cycle Wave 2 draw-down was 14% +/- and lasted 91 days. Thereafter, Cycle Wave 3 was normal and gained 90% +/- over 1,784 days. The corrective Cycle Wave 4 had a draw-down of 18% +/- and took 276 days to complete. Cycle Wave 5 extended and gained 72% +/- over 740 days.

According to Elliot's rules: Compute the time and distance traveled by both the waves 2 and 4 of the lower degree. Then, your correction will be bigger in size and take longer time than the bigger of waves 2 and 4. For example, suppose wave 2 traveled 80 pips and took 7 hours, whereas wave 4 traveled 40 pips and took 5 hours. In this case, your correction will take more than 7 hours and will travel more than 80 pips.

So, this Cycle's corrective sequence will last at least 276 days and the draw-down will be greater than 18% when completed.

The ABC Correction after the 5th Wave was irregular. Irregular corrections usually appear after Wave 5 of a cycle, and would correct the entire five waves according to Elliott's approach to this phenomenon.

The first move after the 5th Wave completes is Wave A which moves in the opposite direction of the immediate trend and is completed by 3 sub-waves.

Next, Wave B that follows is also completed by 3 sub-waves but the price will exceed the top of the 5th Wave.

Thereafter, we will get a normal Wave C made up of 5 sub-waves. Currently, we are in the C wave position.

Irregular Corrections are most frequently seen at the end of an extended 5th wave because extended 5th waves are subject to what Elliot called ‘double retrace’. The first retrace is usually to the beginning of the extending 5th Wave or the distance traveled past the Trend-based Fibonacci Extension Level of .618 level (0-3-4 = 5th Wave Target Area). The second retrace would correct the entire wave sequence.

Chart: First Retrace Complete = 5th Extension

Note the Price Line, it is currently resting right above the .618 Trend-Based Fibonacci Extension Level. The .618 Fibonacci Extension Level is the extension trigger for the 5th Wave. Computing the target area for the 5th Wave is calculated by using a Trend-based Fibonacci Extension with levels 0-3-4 (Wave 1 Beginning-Wave 3 Terminal-Wave 4 Terminal).

Wave Characteristics

Corrective Waves

Wave Degrees

Currently, DJI is in Cycle Wave 3 and is expected to extend. The Target Area for Cycle Wave 3 is between $234-$217. Cycle Wave 3 will extend if $217.29 is broken. If 217.29 is broken look to $183.00 for support.

Correction Cycle Count:

Primary Wave 5 in Cycle Wave 3 is beginning now...

Target for Primary Wave 5 is between $216-$205

Cycle Wave 3 is estimated to be completed in approx. 23 days.

Why are the markets selling off?

1. Fed - Change Coming? - Inverted Yields - More Hikes? - Inflation where? Track Record for Moderating Economic Cycles?

2. China - 2025 Plan Vs. USA - Trade -Tariffs - 90 Day Deadline - Espionage in US Colleges, US Business, Trade Secrets

Examples...

The Department of Justice agreed to show us how they caught Mr. Mallory and why they believe his recruitment by China is part of a massive clandestine campaign to steal not just national security secrets from the U.S. government, but industrial and technological secrets from American companies."We currently have three pending cases against former intelligence officers and they're alleged to have been spying on behalf of the Chinese."It's hard to overstate how unusual it is to have three cases like this ongoing.It's hard to overstate how unusual it is to have three cases like this ongoing. It's not unusual. Its unprecedented. When it comes to espionage, China poses the greatest threat. And it's not even close compared to Russia or Iran or any other country. And if you include economic espionage, industrial espionage, it's not even in the same ballgame. It's trade secrets, proprietary data, intelligence, emerging technology, nanotechnology, hybrid, anything that they can see that is the future. Supercomputing, encryption, those are the issues that they look at. And they have a prioritized schedule that they look at and they send people forward to go collect that data.

John Demers, of the Justice Department's National Security Division, says since 2011, more than 90 percent of the economic espionage cases they have charged have involved China, which has stolen secrets about everything from genetically modified rice seeds to wind-turbine technology.Demers says Chinese operatives have intensified their efforts on industries critical to Chinese president Xi Jinping's "Made in China 2025" program, a 10-year plan to jump ahead of the United States in aerospace, automation, artificial intelligence, quantum computing and other cutting edge industries.

In my recent study at Penn State University, I analyzed 274 cases of Chinese espionage. Several high-level conclusions can be drawn from those cases, which represent the last 20 years of Chinese espionage operations.

China’s espionage operations have expanded dramatically, increasing in the number of operations, personnel, government, and state-owned enterprises, and foreign agents. Lastly, China’s espionage activities continue unabated despite a large number of arrests, public exposure, and most recently, U.S. trade sanctions.

The volume of China’s espionage efforts combined with a trade imbalance, military growth, and foreign and trade policies have driven espionage out of its traditional shadows into the public domain.

The impact of China’s espionage activities can be divided into three categories: The impact on the U.S. economy (through intellectual property theft), the impact on national security, and the impact on U.S. political institutions and governance.

A conservative estimate of the annual cost to the U.S. economy from China’s economic espionage is $320 billion. The Intellectual Property Commission Report provided an estimate of the cost of IP theft for the United States in three categories — counterfeit and pirated tangible goods, software piracy, and trade theft. That estimate is somewhere between $225 billion and $600 billion.

Economic losses have cascading impacts that include loss of industries, loss of domestic production capabilities, loss of jobs, reliance on others, and, of course, a trade imbalance. The U.S. Congress estimates China’s IP theft has resulted in the loss of 2 million American jobs. The cumulative effect on the U.S. economy is trillions of dollars and falling global economic competitiveness.

Efforts covertly funding political candidates, universities, business, and policy initiatives in other countries have been successful.

SAN FRANCISCO (Reuters) - Apple’s (AAPL.O) warning on Wednesday about weak iPhone demand in the holiday quarter is a gloomy omen for Wall Street bulls hoping for an early gift in 2019 following December’s steep selloff.

BEIJING (Reuters) - The social media accounts and messaging apps of a Canadian businessman detained in China have been active since he was arrested in December on suspicion of being engaged in activity that endangered China’s security.

3. Geo-politics - Global Supply Chain - Belt and Road - Syria - Iran - Yemen - OPEC - Brazil - North Korea

Examples...

SINGAPORE (Reuters) - Oil prices fell on Thursday amid volatile currency and stock markets, and as analysts warned of an economic slowdown for 2019 just as crude supply is rising globally.

WASHINGTON (Reuters) - U.S. commanders planning for the withdrawal of U.S. troops from Syria are recommending that Kurdish fighters battling Islamic State be allowed to keep U.S.-supplied weapons, four U.S. officials said, a move that would likely anger NATO ally Turkey.

BRASILIA (Reuters) - Brazil’s newly inaugurated President Jair Bolsonaro said on Tuesday his election had freed the country from “socialism and political correctness,” and he vowed to tackle corruption, crime and economic mismanagement in Latin America’s largest nation.

WASHINGTON (Reuters) - U.S. President Donald Trump said on Wednesday he had received a “great” letter from North Korean leader Kim Jong Un and would probably meet him again in the not-too-distant future as part of efforts to persuade him to give up his nuclear weapons.

4. Mueller Investigation? - Supreme Court Emergency Filings - Country A? Sealed Indictments?

Supreme Court teed up to act on mystery Mueller-related grand jury case
Washington (CNN) The Supreme Court could now decide as early as Wednesday afternoon whether an unnamed foreign-owned company will have to pay daily fines for avoiding a grand jury subpoena related to Robert Mueller's special counsel investigation.The company submitted a reply under seal to the Supreme Court earlier today, following written arguments it and the Justice Department made last week.

The case has still been one of the most secretive in years to progress through the court system. After losing at the trial level, the DC Circuit Court closed a floor of the courthouse during appellate arguments to keep the identities of the arguing attorneys completely under wraps.
Though the Supreme Court allows for cases like this to be secret in their early requests, the high court has never heard a known case where all parties and arguments stayed confidential.

According to a report from NBC, sources have indicated Mueller is nearing completion of his investigation, which began in earnest in May of 2017. Still, much of the evidence that Mueller’s team has collected remains maddeningly clandestine. Despite the near leak-proof investigation, speculation remains abundant.

5. Europe - On the edge of a Revolution? - Yellow Vest Protestors

Examples...

Yellow Vests: Is the movement spreading across Europe? Demonstrations in France by a ‘Yellow Vest’ group over recent weeks have dominated headlines, but similar protests, with the same symbol, have been seen in countries like Belgium, Greece, the Netherlands and in the UK.

French President Emmanuel Macron has seen his popularity slip to its lowest point since he took office, according to a new opinion poll published Friday. Only 40 percent of the French population said they have a favorable opinion of Macron, a drop of 3 percentage points from last month and 12 percentage points from December, while 57 percent said they hold a negative opinion of the president.

'It's time for a new chapter': Merkel steps down as party leader:

BREXIT WARNING: May’s deal chaos MUST end to avoid economic STAGNATION: A study by the British Chambers of Commerce indicated that the economy has “stagnated” and that the percentage of manufacturers planning to raise prices is at its highest levels since last year. Furthermore a survey of 6,000 firms suggested that problems with hiring staff are at near-record highs. Four out of five manufacturers are struggling to hire skilled workers, with almost as many service companies experiencing a similar issue, the BBC report added.

6. Big Tech - Societal Impact? - Users Data? - Privacy and Collection?

Examples...

Big Tech is behaving badly. And I'm not talking about Facebook handing over your personal data to the highest bidder or Amazon playing puppeteer in its HQ2 charade. Big Tech is violating the Sherman Act of 1890. If you think an antitrust law passed over a century ago couldn't possibly address the problems of the digital era, you're wrong. Much like our Constitution, the Sherman Act was written broadly enough to handle whatever the future might hold.
The Sherman Act was created to combat juggernauts that ruled entire industries like oil and railroads. It was made precisely for the highly concentrated power we see today in Big Tech. When passing the law, Senator John Sherman declared, "If we would not submit to an emperor, we should not submit to an autocrat of trade...". Google (GOOGL), Facebook (FB) and Amazon (AMZN) have monopoly power in their respective markets. A market for antitrust purposes includes only those options that consumers would switch to when prices went up or quality went down a small amount. Facebook, for example, doesn't need to have a monopoly over a market as broad as "all social media." All social media platforms are not substitutes for Facebook. You can't see baby pictures on LinkedIn, and you can't keep in touch with Grandma on Twitter. The closest substitute to Facebook is Instagram, which isn't much of a choice since Facebook owns it. The nearly 20-year-old case of US v. Microsoft illustrates how today's tech giants are breaking the law. The court held that Microsoft used its monopoly power in "Intel-compatible desktop PC operating systems" to squash the Netscape browser by requiring computer makers to instead install Microsoft's own Internet Explorer browser. Rather than competing on the merits, Microsoft used its monopoly power to try to take over the internet browser market. Ironically, if the Department of Justice had not sued Microsoft to stop its anti-competitive behavior, Google might not exist! After taking over the internet browser market, Microsoft could have required computer makers to use its own search engine, too. Google, Amazon and Facebook are following the same playbook. The tech giants have "platform privilege" — the incentive and ability to prioritize their own goods and services over those of competitors that depend on their platforms. By doing so, they contend they are improving their products and benefiting customers. An entrepreneur can create a superior product or service and still get crushed because Big Tech is controlling the game and playing it, too. This distorted playing field strikes at the heart of the American Dream. And it deprives consumers of the choice, innovation and quality that comes from competition on the merits.

6. Divided Government - Government Shutdown - Able to come to agreement?

Example...

Congressional leaders will meet in the White House Situation Room today for a border security briefing. President Trump will host congressional leaders in the Situation Room for a 3 p.m. ET briefing on border security, according to the White House. What's at stake: The meeting comes as negotiations to re-open about a quarter of the federal government have been frozen for nearly two weeks, and just one day before Democrats take over as the majority party in the House. Compromise proposals, to the extent they existed in the first place, have not been traded or even discussed in recent days as both sides settled into their respective positions.
Who's likely to attend: A Hill source familiar with the meeting said few details are known about this homeland security briefing, including who will lead it, what else is on the agenda or who else will attend. The invited congressional leaders include Senate Majority Leader Mitch McConnell, Senate Republican Conference Chair John Thune, Senate Minority Leader Chuck Schumer, Senate Minority Whip Dick Durbin, presumptive incoming House Speaker Nancy Pelosi, incoming House Majority Leader Steny Hoyer, incoming House Minority Leader Kevin McCarthy and incoming House Minority Whip Steve Scalise, the source said.

7. Immigration - Caravans arriving on Mexico's border - Trump to close border?

Roughly 150 migrants attempted to climb over or crawl under the U.S.-Mexico border fence into California in a clash with U.S. Customs and Border Protection agents involving rocks and tear gas, the agency said. Agents first discovered a group of 45 migrants in San Diego Monday night due to CBP’s increased presence at the border, following the ongoing migrant caravan. The few dozen migrants were then turned back toward Mexico, CBP said. Shortly after, migrants began throwing rocks over the fence at CBP agents and officers, said authorities.
Migrant caravan - live updates: Trump threatens to close border amid government shutdown as he claims new caravan is forming: People from the three nations formed the bulk of the caravans that have reached the US border in recent weeks, with Mr Trump claiming - without evidence - another is forming in Honduras. It comes as US immigration officials face questions over the deaths of two Guatemalan children at the border in the last two weeks.Mexico is already struggling to cope with a 1,000 percent increase in the number of Central Americans who have sought asylum in this country in the past four years. And the government has slashed the budgets for its migration and refugee agencies for 2019 as part of an austerity plan carried out by the new president, Andrés Manuel López.

Migrant caravan in pictures: A river of people moving north: Thousands of migrants from Central America are crossing Mexico from south to north in the hope of reaching the United States. Many of them are parents with young children seeking a better life away from the violence and lack of opportunities in their home countries. The size of the group has steadily grown from about 1,000 to more than 7,000, according to a United Nations estimate. Observers have described it as "a river of people". Photojournalist Encarni Pindado documented their progress north across the Guatemala-Mexico border.“We have nothing, no program, no fund, no support, nothing to receive people who are sent back from the United States,” said María Dolores París Pombo, a sociologist at the Colegio de la Frontera Norte in Tijuana, who specializes in immigration.

8. Digital Assets/Blockchain - About to disrupt all industries?

Example...

Market research firm Technavio sees the transportation of refrigerated goods by land to grow at a compound annual rate of 7% from 2018 to 2022.Aiding in such growth is the increase of blockchain worldwide, which, according to the firm, will promote transparency and reduce the likelihood of data corruption or alteration. In its press release, Technavio said, “The technology is attaining the growth stage in developed countries. But, the blockchain technology is still in its introduction stage in developing regions such as APAC and the Middle East.” Countries such as China and Japan, it added, have begun using the technology for the pharmaceutical industry, information technology, and transportation, among other industries.

Source: Coingeek.com/blockchain-seen-to-grow-refrigerated-transport-market

9. Corporate Credit - Large-Caps over-leveraged?

Examples...

Suddenly There's No Appetite for Bond Deals as Spreads Widen. Over 40% of the entire corporate bond market, 3.15 Trillion in BBB-rated bonds is one step above junk! Rise of the Zombie. In the US, 15% of the companies in the S&P 1500 are Zombie corporations. The Zombie attribute applies to firms that are unable to cover debt servicing costs from current profits over an extended period. Prolonged cheap debt explains the Rise of the Zombie Corporations. Zombie corporations only survive because they can roll over debt. There are many investment grade bond funds that will either have to break their agreements or dump up to $3.15 trillion of debt if there are significant debt downgrades, and there will be. This will spill over into equities in a major way. Don't be fooled by these stock market rallies. Bonds are due for a huge repricing event and stocks will follow in a major way.

This bubble, widely referred to as the "everything bubble" is really an artifact of a junk bond market fueled by increasingly ignorant Fed policy since 2009. The percentage of investment grade bonds rated higher than BBB has fallen from 59% in 1996 to 42.8% in August of 2018.

GE’s bonds have crashed by around 14 percent - a monumental underperformance in bond market terms. Analysts worry this could signal worse times ahead for investment grade credit overall. According to the Bank of America/Merrill Lynch index, .MERC0A0 the sector’s total 2018 return is negative 2.5 percent, the largest drop since 2008. U.S. companies feasted on low interest rates in the decade since the crisis, leaving corporate balance sheets leveraged to the hilt with some $9.1 trillion of debt, almost double the 2007 total of $4.9 trillion, according to Securities Industry and Financial Markets Association.

10. Brexit - Hard Exit? - Soft Exit? - No Exit?

Example...

First came the news that the European Court of Justice (ECJ) is likely to rule that Britain may unilaterally suspend the exit process from the EU without consulting other members—or the ECJ itself. That undermines Prime Minister Theresa May’s argument that members of Parliament face a choice between the deal she had negotiated with Brussels or an economically disastrous no-deal exit. Soon, lawmakers will probably have a third option: to push back the March 29 deadline for Britain’s departure to allow time for more talks, or a second referendum.

Welcome to 2019, Happy New Years to All.

Buckle up, It looks like we are going to have a hell of a year to say the least...

Will update...

For further market analysis, please visit my related idea (SPY-CRASH IMMINENT).

-AB

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Current Wave Count:

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1Min Chart...

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Key Resistance/Support is $233.45 or .382 Fibonacci Retracement Level

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We are completing Primary Wave 4. The 4th Wave is an ABC sequence and typically retraces to around the .236 and .382 retracement levels (0-Terminal 3).

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The Current 4th Wave sequence completed but then traveled in sub-waves of 5-3-5 and formed an expanding leading diagonal.

When this occurs it is called an irregular/complex correction.

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An important clue is when an irregular correction appears either after wave 1 or wave 3, (i.e. if either wave 2 or wave 4 is an irregular correction) then the next impulse wave will be very strong. For example, if wave 1 and 3 were normal waves, and wave 4 was an irregular correction, you can almost be certain that wave 5 will be an extended fifth.

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So, now we should be expecting a strong extended Primary Wave 5...

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